401k Rollover Rules
A major concern for many Americans is having manageable money and assets after retirement. Millions of Americans invest their money in 401k plans and other types of IRAs including Roth IRAs and Payroll Deduction IRAs. The most common and popular among these retirement plans is the 401k. 401k Rollovers occur when a person takes money, stocks, or assets from a 401k plan and handles it elsewhere. The 401k total employer contributions may not exceed $45,000 in 2007, and $46,000 in 2008. Common reasons for 401k rollovers include changing employers, financial reasons, and tax reasons.
In the financial planning network, there are a handful of rules-of-thumb which tell when an individual should or should not rollover their 401k retirement plan. No one cares to pay heavy fines for mismanaging retirement plans. The simple way to avoid penalties and high fees is by contacting a financial planner well-versed in retirement plans.
Are you considering a 401k Rollover? If you or anyone you know needs help concerning their retirement package, please contact us today!
The most common reasons people rollover their 401k retirement plan is simple and practical: changing places of employment. These days people rarely stay with a company for their entire career and instead of cashing in their retirement plans, they opt to transfer their investments to another company’s plan. There are no penalties in doing so if the transfer is completed correctly. It is recommended to speak with a financial professional familiar with 401k rollovers before attempting to transfer your retirement plan.
Another major reason people move money from your 401k plan is interest rates. If you can save more money by rolling over your 401k, then common sense tells you to do so.
On another note, you should not cash-in your 401k retirement plan if you are under the age of 59. There are stiff financial penalties in doing so.
Types of 401k Rollovers include:
- Direct 401k Rollovers – the most typical and convenient type of rollover involving complete transfer from one 401k plan to another.
- 401k Rollover Payments to Individuals – this kind of rollover is not recommended for those under 59 ½ years of age because of the heavy fines involved, typically 10-20%.
Topics related to 401k Rollover Rules and financial planning include:
- 401k Rollover
- Retirement Investment Plans
- Financial Planning
- Roth IRA
Are you considering a 401k Rollover? If you or anyone you know needs help concerning their retirement package, please contact us today!
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Updated: K.E.
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